BANK balances for both RTGS dollars and FCA Nostros will remain the same and the Reserve Bank of Zimbabwe will not raid anyone’s foreign currency account, the Governor, Dr John Mangudya has said.
Last year the RBZ advised banks to separate foreign currency accounts and RTGS money. Under the stewardship of former Governor Dr Gideon Gono, the RBZ was accused of raiding foreign currency from exporters’ accounts, but Dr Mangudya has assured account holders that all forms of money were safe in the bank, adding that there would be no changes in bank balances despite the recently announced changes through the monetary policy.
“We have never raided anyone’s nostro account, our records can testify and we will not do so going forward,” he said at a breakfast meeting in Harare to discuss the monetary policy he delivered last week.
The breakfast meeting was attended by Finance and Economic Development Minister Prof Mthuli Ncube and captains of industry.
He said although banks agreed to start trading the RTGS dollars as $2,50 to US$1, going forward the rate will be determined on a daily basis by market forces.
“The bank rate will determine the rate on the market. We will arrange foreign lines of credit since demand will be greater than the supply of foreign currency. We need to cloud seed the market with foreign currency,” he said.
Dr Mangudya added that this would also pose an opportunity for foreign currency traders to set up formal bureau de change companies.
“For the foreign currency dealer this is your opportunity to open formal bureau de changes and trade formally. We only have one Zimbabwe and should work together. The parallel market (street) rate is way too high because there is a risk premium, you can go to jail for 10 years. We delayed presenting the monetary policy because we wanted to analyse all submissions from all sectors of the economy so that we speak to everyone, nothing else. Bulk of money in Zimbabwe is seating on the RTGS platform. We only have $437 million of bond notes,” he said.
Dr Mangudya said the implementation of the bond note was necessitated to formalise the export incentive.
“The percent incentive scheme was a shadow exchange rate. It went on well when inflation was below five percent. When the inflation went beyond 20 percent in October the 1:1 exchange became unsustainable,” said Dr Mangudya.
Economists have said the market has received the measures announced by the central bank in a positive way despite fears people had that the policy was likely to cause tremours on the market.
“This is a positive start, people feared after the announcement that prices would go up and there will be chaos in the market. The market has embraced the changes and even retailers have not increased prices,” said an economist with a banking institution. He said the move also gave the RBZ some air to breathe on monetary matters.
“When we were exclusively using foreign currency, the bank was constrained in controlling money matters because it had no control over money supply. With the RTGS dollars there is some way of negotiating the matter although the ultimate solution lies in introducing our own currency which obviously has to be backed by output.”
The RTGS dollars will also help Government to control its spending. Finance Minister Prof Ncube has already indicated that the Government was now standing on a cash position since it can also harness plastic money. The Government paid its January and February salaries standing on cash position, he added.
Economists say a cash position represents the amount of cash that a company, investment fund or bank has on its books at a specific point in time. The cash position is a sign of financial strength and liquidity.
“Fiscal consolidation measures are already helping to balance the budget. On the other hand, the income from two percent tax (on electronic transfers) will also be used to rejuvenate and improve the new Zimbabwe; building schools, roads and making sure our nurses, doctors and teachers receive the wages they deserve. We can already see that shelves are full and fuel lines have petered out.”
He added that the ministry will undertake a global deal road show in different countries to explain the country’s economic situation in June or July.
“We will be in Frankfurt and Tokyo. We expect to sign deals that will benefit the country’s economic performance.sundaynews